Alps Ltd manufactures & sells snowboards. The company manufactures a single model, the Slider. In the summer of 2020, Alps Ltd.’s management accountant gathered the following data to prepare budget for 2021.

Material & labour requirements:

Direct Materials

Wood 1.25 board meters (b.m.) per snowboard

Fibreglass 4.8 metres per snowboard

Direct manufacturing labour 5 hours per snowboard

The company’s CEO expects to sell 1000 snowboards during 2021 at an estimated retail price of $700 per board. Further, the CEO expects 2021 beginning inventory of 100 snowboards and would like to end the 2021 with 200 snowboards in stock.

Direct material inventory:

Beginning inventory 1/1/21 Closing inventory 31/12/21

Wood 500 b.m. 375 b.m.

Fibreglass 800 metres 1600 metres

Variable manufacturing overhead is $14 per direct manufacturing labour hour. There are also $132 000 in fixed manufacturing overhead costs budgeted for 2021. The company combines both variable & fixed manufacturing overhead into a single rate based on direct manufacturing labour hours. Variable marketing costs are allocated at the rate of $250 per sales visit. The marketing plan calls for 30 sales visits during 2021. Finally, there are $30 000 in fixed non-manufacturing costs budgeted for 2021.

Other data include:

2020-unit price 2021-unit price

Wood $112.00 per b.m. $120.00 b m.

Fibreglass $6 per metre $6.25 per metre

Direct manufacturing labour $48 per hour $50 per hour

The inventoriable unit cost for ending finished goods inventory on 31 December 2020 is $580. 80. Assume Alps uses FIFO inventory method for both direct materials & finished goods. (Ignore work in process).

Budgeted balances as at December 31, 2021 are:

Cash $10 000

Property Plant & equipment (net) 850 000

Current liabilities 17 000

Non-Current liabilities 178 000

Share Holders’ equity 844 000

Required:

a) Prepare Sales budget for 2021

b) Prepare production budget for 2021

c) Prepare the direct material usage & purchase budget

d) Prepare direct manufacturing labour budget